Black Business Owners Must Now Prove 'Social Disadvantage' To Get SBA Loans

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Black business owners now have to prove they are "socially disadvantaged" to qualify for certain loans from the U.S. Small Business Administration (SBA).

According to Business Insider, all participants of the SBA 8a Business Development program are required to write a "social disadvantage narrative" in order to continue to be eligible to receive monetary awards.

The requirement comes after the Supreme Court's decision to end affirmative action. In July 2023, a federal judge in Tennessee ruled that business owners aren't allowed to use race as a reason for facing disadvantages in the U.S.

“The determination of which groups of Americans are presumptively disadvantaged compared with others necessarily leads to such a determination being underinclusive because certain groups that could qualify will be left out of the presumption," the judge ruled in July.

“SBA must determine that the discrimination or bias experienced by an individual is chronic, substantial, and has occurred within American society (not another country). Additionally, the discrimination must have negatively impacted the individual’s entry or advancement in the business world.”

In the "social disadvantage narrative," business owners must include “a who, what, where, why, when, and how the discrimination occurred.”

SBA Administrator Isabella Guzman said the Biden administration is doing everything it can to support small businesses in response to the ruling.

“The BA and Biden-Harris Administration remain committed to supporting this crucial program and the small business owners who have helped drive America’s strong economic growth,” Guzman said.

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